The plan is meant to secure the banks’ futures, but it also means profits will have to be shared with the government.

In addition, the injection of taxpayers’ money will mean that the banks will not be paying dividends to their shareholders.

HBOS closed down 27.5%, Lloyds TSB was 14.5% lower and RBS down 8.4%.

BBC business editor Robert Peston said the banks faced “absolute humiliation”.

It would “count as perhaps the most extraordinary day in British banking history”, he added.

Paul Kavanagh, at the brokers Killik & Co said: “It’s good news for the banking system, but it’s not necessarily good news for share prices of the banks”.

“One thing the banks have had to concede is to stop paying dividends. Many bank shareholders are the big income funds and they’ve been selling them today.”

‘Extraordinary times’

RBS will receive £20bn of taxpayers’ money with a further £17bn to be put into HBOS and Lloyds TSB. Barclays intends to raise £6.5bn without government help.

“It’s immensely regretful we’re coming to shareholders to raise funds again, it’s something we feel bad about” Sir Tom McKillop RBS chairman

Taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS.

The government will also get a say in how the three banks are run, and executives will see their cash bonuses limited or forbidden.

Chancellor Alistair Darling told MPs that the rescue package contained: “essential steps in helping the people and businesses of this country and supporting the economy as a whole”.

Prime Minister Gordon Brown said the bail-out was: “unprecedented but essential for all of us”, and would thaw frozen money markets.

“In extraordinary times, with financial markets ceasing to work, the government cannot just leave people on their own to be buffeted about,” he added.

‘Surgical approach’

Mr Brown insisted the investments were assets and, “not just money being pumped in”, adding the government intended to sell the investments at some point.

The measures needed to be accompanied by international banking system reforms, he added.

“We must now put in place new structures and new rules for the future. This cannot simply be a short-term rescue to paper over the cracks. Only a surgical approach that gets to the root of the problem will now work to ensure the problems do not return.”

The Treasury cash forms part of the government rescue plan announced last week.

Management shake-up

As part of the banks’ announcements:

– RBS said chief executive Fred Goodwin was quitting with immediate effect – without a severance pay-off. He will be replaced by British Land boss Stephen Hester. RBS chairman Tom McKillop is to retire.
– Lloyds and HBOS said they had renegotiated their merger, reducing the number of Lloyds TSB shares that HBOS shareholders will receive.
– HBOS chief executive Andy Hornby and chairman Lord Dennis Stevenson said they would stand down from their posts after the merger with Lloyds TSB was complete. Neither will take any extra payments when they leave.
– RBS and Lloyds TSB/HBOS will return mortgage and small-business lending to 2007 levels, which is much more than they are currently lending.

“It’s not wrong to call it nationalisation but it’s very different from Northern Rock. Shareholders will continue to own a big chunk of the banks” Robert Peston BBC Business Editor

Other developments included:

– Major central banks saying they would offer financial institutions an unlimited amount of short-term dollar loans to help stem the crisis.
- London’s FTSE 100 index rising by about 5% as investors reacted to the news, though banking shares were mixed.
– As a condition of the deal, the government has insisted that senior directors should get no cash bonuses this year, with future bonuses to be paid in the form of shares – a move aimed at encouraging management to take a more long-term approach.

Dividend cancelled

The government will buy £5bn of preference shares in RBS and another £15bn of ordinary shares if, as many expect, the bank is unable to find willing private investors.

BANKS AND THEIR BAIL-OUTS
RBS – £20bn (government takes 60% stake)
Lloyds TSB/HBOS – £17bn* (government takes 40% stake)
*dependent on merger being completed

Check UK bank shares

“It’s immensely regretful we’re coming to shareholders to raise funds again, it’s something we feel bad about,” said RBS chairman Sir Tom McKillop. “We cannot help but feel contrition.”

HBOS will raise £11.5bn from taxpayers, made up of £8.5bn in ordinary shares and £3bn in preference shares, while Lloyds TSB is to get £5.5bn.

The money is conditional on the merger of the banks going through.

Lloyds TSB and HBOS said the deal was still on, but that the terms had been renegotiated.

A £12.2bn deal was agreed last month, but the value of HBOS shares has since plunged and the extent of the recapitalisation has highlighted its weakness.

Under the revised deal, HBOS shareholders will get 0.605 Lloyds TSB shares for every HBOS share they hold. Under the original deal they would have received 0.83 Lloyds TSB shares.

‘No Rock’

Barclays has said it is to raise £6.5bn of new capital. The bank is to raise the money from private investors, rather than going to the government.

Barclays also said it would scrap its final dividend payout for 2008, saving it £2bn.

Our business editor said it was not wrong to describe the part-ownership of RBS, Lloyds TSB and HBOS as nationalisation, but the situation was very different from Northern Rock and Bradford and Bingley, which had seen private investors lose their holding.

“Shareholders will continue to own a big chunk of the banks,” he said.

News reported by The BBC

Wells Fargo has announced it is set to buy Wachovia for $15.1bn (£8.5bn).

This scuppered an earlier US government-backed rescue deal in which Citigroup would buy Wachovia’s banking arm for $2.2bn.

Citigroup has now objected, saying the new agreement breached its exclusive acquisition rights and has demanded that it be called off.

Exclusive agreement

But a few days later it was courted by another suitor Wells Fargo.

“Wachovia’s agreement with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia” Citigroup statement

Wells offered to buy all of Wachovia for much more money, and so Wachovia walked away from its agreement with Citi.

This has clearly angered Citigroup, which said it had nearly completed its own deal with Wachovia.

This would have been overseen by the Federal Deposit Insurance Corporation (FDIC), and would have included government help.

“Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia,” Citigroup said in a statement.

The fight for Wachovia has come amid a crisis that has seen investment bank Lehman Brothers go bust, and the failure of giant mortgage lender Washington Mutual.

Financial difficulties

Cassandra Toroian, chief investment officer at Bell Rock Capital added: “For Citigroup, this is a real loss…this was a deal that was going to save them as much as it was saving Wachovia.”

“This deal enables us to keep Wachovia intact and preserve the value of an integrated company.” Robert Steel Wachovia chief executive

Wachovia’s financial difficulties stemmed from its 2006 purchase of mortgage lender Golden West for $25bn at the height of the then US housing boom, according to analysts.

Wachovia’s chief executive, Robert Steel, said: “Today’s announcement creates one of the strongest financial firms in the world.”

“This deal enables us to keep Wachovia intact and preserve the value of an integrated company,” he said.

Shareholder questions

Wells Fargo said it expected its earnings to benefit from the new agreement within a year, but some question the attraction of the deal for Wells’ shareholders.

Nancy Bush, analyst at Nab research said: “I think it’s a more elegant solution for Wachovia shareholders.”

But she added: “If I were a Wells Fargo shareholder…I wouldn’t be so happy. Wells is going to have to go to the capital markets at a time when it’s not so easy to raise capital.”

The deal still has to be approved by shareholders.

News reported by The BBC

Analysts say the move is an attempt by the software giant to use its spare cash to prop up its share price which has fallen by almost 30% this year.

Hewlett-Packard and Nike have also announced major buy-back programmes.

The personal computer-maker will buy back $8bn of shares, while Nike’s plan is worth $5bn.

‘Attractive prices’

Microsoft said the buy-back plan showed its “confidence in the long-term growth of the company and our commitment to returning capital to our shareholders.”

Industry watchers have said Microsoft will be hoping the plan will revive its share price which has declined this year, partly due to its failed $47.5bn (£26.3bn) bid to buy the internet portal Yahoo.

“I’m impressed,” said Michael Holland of the deals. He oversees $4bn (£2.2bn) as chairman and founder of Holland & Co in New York.

“When companies have come in to buy their own stock subsequent to a financial crisis, they’ve bought at attractive prices and it’s been a good use of liquidity,” Mr Holland told Bloomberg News.
Microsoft stock rose 4% at the start of trading

At the end of June this year, the company was sitting on a cash mountain of $23.7bn and has never been in debt in its 33-year history.

The BBC’s technology reporter Maggie Shiels said there was little doubt Microsoft had to do something because it simply had too much cash lying on its books following the company’s failed attempt to buy either all or part of Yahoo.

Dealogic said the new buy-back, which will run until 2013, was the largest single announced share-buyback in history.

It follows a previous 2004 plan which started as a $30bn project and was later boosted by another $10bn.

‘Volatile market’

HP said its board approved an $8bn repurchase following a previous programme which started in November. About $3bn (£1.6bn) remains from that authorisation.

The firm said it gave the go-ahead to the share buy-back to counteract the effect employee stock plans have on ownership percentages.

Just last week the PC-maker announced it was cutting 24,600 jobs in the wake of its acquisition of Electronic Data Systems Corp.

Meanwhile Nike’s plan to buy back $5bn of shares over the next four years has been welcomed by Standard & Poor’s Equity Research as providing “support to the shares in a volatile market.”

Share buy-backs peaked in the third quarter of 2007 at $172bn according to Standard & Poor’s senior index analyst Howard Silverblatt. The figure for the first quarter of this year is $113.9bn.

News reported by The BBC

The news comes at a time when one of the club’s key shareholders, US sports tycoon Stan Kroenke, has become a non-executive director of the club.

Despite failing to win any silverware, the club’s income rose by 11% to £223m thanks to more lucrative TV deals.

Its debts rose by 12% to £318m as it borrowed more to pay for redeveloping its old Highbury stadium.

But the club said those debts would fall this coming year as the development of the North London stadium, called Highbury Square, is completed and the 680 flats are eventually sold.

Takeover?

The most eye-catching development is the appointment of the billionaire US sports entrepreneur as a non-executive director at Arsenal.

The board said it had invited Mr Kroenke, who owns a 12% stake in the club, to join the club because of his experience in managing sporting businesses and to help in the further commercial development of the club.

His firm, Kroenke Sports Enterprises (KSE), owns the Denver Nuggets basketball franchise, the Colorado Avalanche ice hockey team and Major League Soccer side Colorado Rapids.

When he bought his stake in Arsenal in early 2007 it was thought he was preparing to launch a takeover.

That possibility led to the club’s former vice-chairman David Dein being forced out because of his apparent support for such a move.

Dein then sold his shareholding to the Russian billionaire Alisher Usmanov, whose investment vehicle Red and White Holdings now controls a 23% stake in Arsenal.

To thwart any hostile takeover, the remaining Arsenal directors agreed to a “lock-down” – which means they cannot sell their shares to anyone before April 2009 other than a limited number of people, such as family members.

After that, until October 2012, they cannot sell to anyone else without giving the other directors the first option to buy.

Mr Kroenke is not party to that agreement but said he would not raise his own stake in the club beyond 29.9% at any time in the next 12 months, unless it was with the agreement of the Arsenal board or if the club was the subject of a takeover bid.

BBC sports editor Mihir Bose said: “Arsenal are feeling they should broadcast the fact that the financial world may be in meltdown but they are fine.

“The elephant in the room is Usmanov, the Uzbek businessman. The question is what will he do? Will he bid for the club? That still remains a question mark.”

Stadium

The Arsenal chairman, Peter Hill-Wood, said the club was in a strong financial position which vindicated its decision to move to the new Emirates stadium two seasons ago.

“Emirates Stadium has taken our football revenues to a new level” Peter Hill-Wood

“We are committed to operating the Club as a business which is financially self-sustaining,” he said.

“This is clearly demonstrated having achieved our second highest ever pre-tax profit of £36.7m.

“Over the last two seasons Emirates Stadium has taken our football revenues to a new level, but we cannot be complacent,” he added.

The Gunner’s chairman admitted that the sale of flats at Highbury might be affected by the current downturn in the UK property market, which he said was being “closely monitored”.

But he explained that the club’s finances did not depend on this future income.

“The final profits and cash to be released to the club on completion of these property developments has not been budgeted by the club and will be treated as a bonus when received – accordingly, there is no commitment to use any such profits and cash at any specific time for any specific purpose.”

Initial income will however be used to pay off the club’s bank loans.

News reported by The BBC

The vote will take place as the shockwaves from the collapse of of the 158-year-old Wall Street giant Lehman Brothers reverberate worldwide.

Last month A&L sent a letter out to more than 560,000 shareholders urging them to support the deal.

A&L considers that its prospects as an independent entity are not good.

Merger plan

The bank’s shareholders will convene at Birmingham’s International Convention Centre later.

They are being offered one Santander share for three A&L shares as part of the planned takeover offer which was announced in mid-July.

If the deal takes place as planned this October, then A&L will be merged with Banco Santander’s existing UK subsidiary, Abbey.

This will create a much larger bank with 959 branches and 10% of the UK’s bank current accounts.

With the credit crisis wiping out most of A&L’s half-year profits and the continued high cost of securing funding in the wholesale markets, the bank’s board is keen to insulate itself against a worsening economic backdrop.

Its shares ended 6% lower on Monday after a series of dramatic developments on Wall Street hit confidence in the UK banking sector.

News reported by The BBC

The company has been struggling since the French company, Alcatel bought US based Lucent Technologies in 2006.

Ben Verwaayen was chief executive at BT for six years, stepping down in June.

It is hoped that his experience in the telecoms industry will help bring Alcatel-Lucent back into profit and create a better merged organisation.

Alcatel-Lucent, the world’s largest maker of fixed-line telecommunications equipment, also named former EADS joint chief executive Philippe Camus as its non-executive chairman.

The new team will take over from Patricia Russo and Serge Tchuruk, who did the deal to merge Alcatel and Lucent.

Clash of cultures

Analysts said that Alcatel-Lucent’s patchy performance was not helped by clash of cultures between the French and US parts of the business..

In July, the company unveiled a three-month loss of 1.1bn euros ($1.7bn; £866m) and warned sales would not improve in this quarter.

The telecoms company has suffered six successive quarterly losses since the merger.

Ben Verwaayen has been credited with turning round the fortunes of BT, fighting off stiff competition and consolidating the firm’s position in the broadband market.

Acatel-Lucent’s board said that Mr Verwaayen’s years of experience in the industry had iven him a great insight into the company.

Mr Verwaayan said: “I’m truly delighted to become the chief executive of Alcatel-Lucent, leading a company with vast assets and great talents, while recognizing the difficulties and challenges ahead.

“I am committed to building significant and sustainable value for our shareholders, customers and employees.”

The 56-year-old will take up his new position at the company on 1 October.

News reported by The BBC

Reiterating its stance from July, Australia’s second-biggest energy firm said BG’s offer price of A$15.50 undervalued Origin and its prospects.

But BG boss Frank Chapman, leading the hostile bid, said: “Origin’s response lacks any substance or clarity.”

And he said there was no evidence to support the view BG undervalued Origin.

Coal seam gas

“Nor is there any forecast or other financial information which could assist shareholders in valuing the company and making a timely and informed decision,” added Mr Chapman, who is BG’s chief executive.

BG said in June it would go directly to Origin’s shareholders after the board rejected a friendly bid of A$15.50 a share in May.

“Origin is a strongly performing, Australian integrated energy company with an impressive track record of growth,” its chairman Kevin McCann said in a statement on Tuesday.

Origin has developed the leading position in coal seam gas (CSG) in Australia and the strength of this position will be a key driver for continuing growth.”

Mr McCann said Origin had a number of potential partners interested in extending development of the CSG reserves.

Origin also said it would provide shareholders with an independent valuation report containing “all relevant information about Origin’s value and prospects” before BG’s offer closes on 26 September.

But BG’s Mr Chapman said: “Origin has failed to demonstrate any confidence that the coal seam gas ‘monetisation’ process will yield superior value for its shareholders.”

He also said that it was BG’s bid that was holding Origin’s share price at slightly higher than the A$15.50 offer.

‘Early days’

BG went hostile with its all-cash offer on 24 June after an agreed deal was rejected by Origin at the last minute.

The offer is at a 48% premium to Origin’s closing share price on 29 April, before the move was announced.

“There’s a sense that Origin has gotten quite a positive response on its CSG monetisation process, but that’s still in early days, so it’s hard to decide which is a better option,” said Jason Mabee, a utilities analyst at ABN Amro.

“It’s difficult to say what BG might do. There’s a high chance they will wait until they get more details on the CSG monetisation proposals Origin has received, but they could also make a pre-emptive strike and launch a higher offer.”

News reported by The BBC

The news came on the day that B&B confirmed that Richard Pym, former head of Alliance & Leicester, is to take over as chief executive, a move that has been welcomed by the City.

B&B yesterday announced that shareholders had picked up just over 230 million, or 27.8 per cent, of the shares issued via the rights issue launched last month. The take-up of the offer, which closed at 11am on Friday, is ahead of the 20 per cent predicted last week.

A spokeswoman for the bank said the management was happy to have concluded the process and that the group was “on the road” to recovery. “It has been a tough process but we got there in the end,” she added. Bruce Packard, an analyst at Pali International, added: “It could have been worse.”

The take-up of shares does not affect B&B, as the issue was fully underwritten, guaranteeing it the full sum. The underwriters Citigroup and UBS will now start looking for subscribers for the remaining 597 million shares or face buying the shares themselves. The deadline for syndicating is 3.30pm on Friday.

The two powerhouse banks, whose fees amount to 10 per cent of the total issue, will not take the full hit as they have already called in UK banks and leading B&B shareholders to act as sub-underwriters. The sub-underwriters comprise Abbey, HBOS, Barclays, Royal Bank of Scotland, Lloyds TSB and HSBC, which between them could be left with a fifth of the increased share base.

B&B remains one of the most shorted stocks in the market, with 51 million shares out on loan, according to Data Explorers. It is possible that – as with HBOS’s rights issue – some of the underwriters could be selling the stock short. The move, which benefits from the share price falling, provides a hedge against being left with the rump of the unsold stock on an underwriter’s books.

The lead investors Legal & General, Standard Life, M&G and Insight are understood to have taken their full allocation of 14 per cent.

One source close to the process said that some of the retail investors did pick up shares, despite predictions that few of the 950,000 would buy in at the levels seen last week.

Fears for the success of the issue grew last Wednesday, as B&B’s shares fell below the 55p per share rights price, but B&B directors will be happy that the take-up did not go as badly as the process at HBOS, where only 8.29 per cent of investors exercised their rights. In contrast, close to 95 per cent of shares were taken up in RBS’s rights issue earlier this year.

One banking source said the feeling was one of relief that the process was over. It has been long and tortuous, with the issue failing twice before they finally got it away. Questions remain over B&B’s future, with some suggesting it could be a takeover target.

Shares in B&B closed at 54p, down 0.75p, yesterday.

News reported by The Independent

EA has so far had its $25.74-a-share bid for the Grand Theft Auto owner spurned by Take-Two shareholders.

And it said it was now impossible for any takeover deal to be completed in time for the lucrative Christmas shopping season.

Take-Two shares fell 5% on news that EA was allowing its offer to expire, but the firms said they were still talking.

‘Validation’ needed

The bid, made in February, was “predicated on distributing their [Take-Two's] products at Christmas this year”, said an EA spokesman.

It would now have to “validate” the level of its offer, they added.

EA, which is behind games including Madden and Need For Speed, had taken its offer directly to Take-Two shareholders after its board rejected the bid as undervaluing the company.

After a meeting at the weekend, EA has agreed to attend a presentation by Take-Two which will include details of its product release schedule and financial forecasts.

News reported by The BBC

Multinational cement firms Holcim and Lafarge will sign agreements with the country to transfer shares of their local subsidiaries.

The country has begun nationalising industries, including electricity and gas, as part of President Hugo Chavez’s drive toward “21st-Century socialism”.

However, the Venezuelan government made no mention of Mexican firm Cemex, the country’s largest cement producer.

Details of the compensation talks have not been made public.

A spokeswoman for Lafarge said that the company was working to protect the interests of shareholders and staff based in the country.

President Chavez has accused foreign cement firms of demanding excessive profits and selling their cement overseas.

Taking them over, he said, would allow his government to progress faster with plans to end a massive housing shortage.

Venezuela aims to secure at least 60% ownership of cement companies and has said private companies can keep minority stakes.

Banking and telecommunications industries are also set to be taken over by the state.

News reported by The BBC